Thursday, June 29, 2016

In the recent issue of
Long Island Boating World magazine, Tim
covers maritime law issues related to dealing with marine
insurance claims stemming from boating accidents and other
maritime incidents involving bodily injury, property damage, lost
wages, medical expenses and other forms of economic and non-
economic (pain and suffering) losses.

See the Long Island Boating World article
A Duty to Cooperate
with the Insurance Carrier

It comes as no surprise that many of the inquiries I receive from
boat owners involve insurance denials. An insurance carrier
denies a claim for hull damage because it determines that water
leakage was the result of normal wear and tear rather than a
single catastrophic event. Or a carrier denies a claim for balsa
core damage after concluding it was the result of a latent defect,
something not covered in a policy.

Now there’s no shortage of reasons why insurance carriers can
deny claims. For starters, the damages at hand might not be from
a peril listed in the policy. Or the damages could be the result of
using a vessel in a manner that falls outside the terms of a policy.
For instance, a boat may have been used for commercial
purposes while the policy expressly limited coverage to personal

And then there are those instances where the claim at hand
might have been approved and paid, but the conduct of the vessel
owner results in denial. These situations tend to be less
common, but nonetheless, they appear now and then. In general,
there is an obligation on the part of a vessel owner to cooperate
with the insurance carrier as it conducts its investigation of a
claim, whether the loss involves hull damage, machinery
damage, personal injury, medical expenses, or other forms of
tangible loss.

Vessel owners could have their reasons for failing to cooperate
in this vein. They could have concerns that what they say will be
used against them by the insurance carrier in court. Someone
may have advised them that they should save their testimony for
court, only when it’s absolutely imperative in the course of formal
legal proceedings. Or they may have missed seeing a letter from
the insurance carrier that accidentally got shuffled away
between the phone bill and electric bill.

Whatever the reason for a vessel owner’s non-cooperation, the
result is generally an unequivocal denial of a claim from the
carrier. For instance, a carrier’s representative may wish to ask
questions over the telephone. Or the request could be framed in
a more formal manner, where the carrier wants a meeting for a
statement under oath.

Sometimes the request for cooperation is in the form of
paperwork, rather than a telephone statement or face-to-face
meeting. If there was a boating accident, a carrier’s
representative will want accident reports, records of testimony
from witnesses, and other information regarding the operation of
both vessels. Such information is clearly necessary to determine
which vessel was at fault.

If there were injuries, the carrier would likely schedule a physical
examination for a doctor to evaluate a claimant. If there was
serious hull damage, the carrier would likely send its adjustor or
surveyor to inspect a vessel. Failing to cooperate with such
efforts on the part of a carrier to gather information would likely
result in denial of a claim.

A short excerpt from insurance case law might serve to illustrate
this concept of cooperation with a carrier. In its decision, the
federal court expressed its position that “failure of an insured to
cooperate with the insurer has been held to be a material breach
of the contract and a defense to suit on the policy… ” (Hamilton v.
State Farm Fire & Casualty Ins. Co., 477 F. App’x 162, 165 5th
Circuit 2012).
Read the court's decision on, a
compendium of federal district & circuit court and state court

It’s worth pointing out that every case can be different. This brief
discussion touches upon a general premise of insurance law.
However, vessel owners could have their reasons for taking a
certain course of action based on guidance from an attorney in
anticipation of legal proceedings. While this premise of
cooperation seems simple and straightforward, some disputes
can be very complex. There can be settings where cooperation
or not, things will turn contentious due to the fact that so much is
at stake in a settlement conference or jury verdict.
Duress Raised as a Legal Issue in a Salvage Lawsuit...

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